Practical guidance for directors on handling BBL debt with insights from Molly Monks of Parker Walsh

Bounce Back Loans (BBLs) were a lifeline for UK businesses during the pandemic, providing quick, government-backed funding. For many, they enabled survival through unprecedented disruption. But as repayment schedules accelerate and cash-flow pressures persist, some businesses now face unsustainable BBL debt.

Understanding the options, both for solvent and insolvent companies, is critical to protecting the business, directors, and stakeholders. Molly Monks of Parker Walsh, a specialist in distressed business advice, outlines the paths available to companies struggling with BBL obligations.

Why BBL Debt Can Become Unsustainable

While BBLs offered favourable terms initially, such as low interest, government guarantees, and minimal credit checks, challenges include:

• Rising repayments as the loan term progresses accumulating interest and late charges if payments are missed
• Cash-flow pressure limiting investment, payroll, or operations
• Director personal risk if the company becomes insolvent.

Even profitable businesses may find that servicing a large BBL alongside other operational costs strains liquidity.

Solvent Options for Managing BBL Debt

If your company remains solvent, there are several strategies to consider:

Refinancing

Consolidate the BBL with other facilities, extend repayment terms with the lender, and potentially reduce monthly outflows.

Voluntary Repayment Adjustments

Some lenders may agree to a temporary payment holiday or restructuring. This requires open dialogue and timely negotiation.

Members’ Voluntary Liquidation (MVL)

If the company is solvent but directors want to close the business, an MVL allows tax-efficient extraction of funds. BBL obligations can be settled from company assets.

Molly Monks notes that early planning with a licensed practitioner ensures BBLs are managed compliantly and tax-efficiently.

Insolvent Options When Repayment Becomes Unmanageable

If the company is unable to meet its debts, including the BBL, insolvency procedures may be appropriate:

Company Voluntary Arrangement (CVA)

A formal agreement with creditors to repay part of the debt over time. This can include BBL restructuring under creditor approval.

Administration

Provides a moratorium while options are explored, including potential sale or restructuring. Offers legal protection from enforcement actions.

Creditors’ Voluntary Liquidation (CVL)

A controlled closure for insolvent companies. Allows directors to avoid personal liability where obligations, including BBLs, cannot be met.

Director Considerations

BBL debt introduces specific director risks:

Breach of lender terms can trigger early repayment demands

Wrongful trading exposure if the company continues trading when insolvent

Personal guarantees may be called if signed

Molly Monks of Parker Walsh advises:

“Directors must understand both the company’s solvency and their personal exposure. Acting early with expert guidance reduces risk and increases options.”

How Parker Walsh Supports Businesses With BBL Debt

The team at Parker Walsh helps directors navigate BBL challenges by:

• Assessing company financial health and repayment capacity
• Exploring formal and informal restructuring options
• Liaising with lenders to negotiate practical solutions
• Advising on insolvency procedures if necessary
• Protecting directors from personal liability while maximising business outcomes

Their approach ensures directors make informed, proactive decisions rather than reactive ones under creditor pressure.

Summary

Bounce Back Loan debt is manageable for many businesses, but ignoring repayment challenges can escalate problems rapidly. Whether the company is solvent or insolvent, early assessment and action are key to protecting both the business and its directors.

As Molly Monks of Parker Walsh emphasises:

“BBLs can be navigated successfully, but timing is critical. The sooner you assess options, the more pathways remain open.”

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